Pakistan establishes Energy Infrastructure Development and Management Company

Pakistan has launched the Energy Infrastructure Development and Management Company to tackle inefficiencies in the nation's power sector, the Secretary of the Power Division informed the Senate Standing Committee on Power.

The meeting, chaired by Senator Mohsin Aziz, highlighted this initiative as part of broader efforts to modernize infrastructure and enhance operational efficiency.

The new company will oversee feasibility studies, manage grid station assets, and engage with donors to streamline project execution, the Secretary added. The committee also reviewed plans to restructure the National Transmission and Dispatch Company (NTDC), aiming to split it into smaller, more efficient units.

During the session, the parliamentary panel addressed pressing issues in Pakistan’s power sector, including state entity restructuring, cost-saving measures, and privatization efforts. The Secretary updated the committee on cost-saving measures, noting the renegotiation and termination of contracts with Independent Power Producers (IPPs).

Five IPPs have been shut down, yielding savings of PKR 411 billion, while revised agreements with eight bagasse-based power plants have cut PKR 238 billion by eliminating dollar-based contracts.

Additionally, the Cabinet approved the termination of agreements with 15 take-or-pay IPPs, resulting in projected savings of PKR 802 billion. These plants will now only receive payments for operational use, significantly reducing the financial burden.

Senator Shibli Faraz criticized the lack of strategic planning within power sector institutions and urged the establishment of a dedicated think tank to address systemic inefficiencies.

"Planning is critical to avoid repeating the mistakes of the past," Faraz emphasized, pointing to issues with IPPs and rising energy costs.

He also criticized the government for penalizing small-scale solar energy producers, questioning its claims of offering the cheapest electricity in the region. "Exports cannot grow unless we bring electricity costs down," he remarked.

Faraz also expressed frustration over the lack of follow-up on a previous report he presented on circular debt. He urged the committee to revisit the report for actionable insights.

The committee was informed of plans to privatize IESCO, FESCO, and GEPCO within the year. The Power Division Secretary noted that a financial advisor for the privatization process would be appointed within 10–15 days. However, Senator Faraz suggested bundling performing and underperforming companies to attract investors.

Provinces have shown reluctance to take over struggling entities such as TESCO and QESCO, the Secretary disclosed, with letters sent to chief ministers and chief secretaries receiving no responses.

"The government’s intent is clear: to exit the distribution business entirely," the Secretary stated.